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The general objective of the study was to examine the Effect of non-loan repayment on
Microfinance Institution performance by borrower from SMEs in Dar es Salaam. The
specific objectives were to identify the leading factor affecting performance of financial
institution, to find out important element of non-loan repayment in Microfinance
institution in predicting performance, to compare the Effect of non-loan repayment by
employees and customers and to compare the assessment of performance by employees
and customers in order to assess the reasons for loan defaulting by SMEs and to assess
whether non loan repayments has effect to Microfinance Institutions performance.The
study applied a case study design whereby CRDB was a case study. The study conducted
in Dar es Salaam. The population of the study was SMEs clients of CRDB. The study
involved a sample of 50 respondents. The researcher used simple random sampling in
selecting sample. The study applied primary and secondary data. Data collection tools
were questionnaire, interview and documentation. The data were managed as soft copies
in the computer. The Statistical Package for Social Science (SPSS) was applied to
analyze data.
The findings of the study show that defaulting rate at CRDB Bank Ltd is relatively low
and more is to the non performing loans. It was found that the bank classify its loan
defaulters into five classes which are pass, special mention, sub standard, doubtful and
Loss. From the respondents it was found that most the borrowers default due to among
other reasons were high loan interest rates, processing costs and long processing period,
external environments like change government policies, natural climatic change,
volatility of world economy, and markets. It was recommended that the banks should
perform critical analysis before advancing loans, loan costs to be reduced relatively to
real market returns, SMEs advised to undertake various training of entrepreneurship and
financial management, SMEs also to borrow according to business needs. Furthermore
the government to update policies to work in favor of SMEs and monitor bank activities. |
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